Russian Expat Invasion of Cyprus Has Sinister Overtones

Excerpts from an article by Luke Harding, published on January 26, 2012 in the Guardian, UK.

“A mysterious Russian cargo ship limped into the Cypriot port of Limassol, this month, forced to seek shelter from a violent storm.

“Hidden on board the MS Chariot were four containers packed with 60 tonnes of ammunition for AK-47s and for rocket launchers. The shipment had come from Moscow's state arms company, Rosoboronexport; its shadowy purchaser was none other than the Syrian government.
Cyprus, an EU member since 2004, was supposed to seize the cargo. The weapons flagrantly breached the EU's strict embargo on military supplies to the Syrian regime, which since last year has been violently engaged in shooting and killing its own citizens and anti-regime protesters.
Instead, Cypriot officials allowed the ship to leave after receiving vague assurances it would alter its route. The captain refueled, left and then set a brisk course for the Syrian port of Tartus, where he delivered his dubious cargo.

“Cyprus's reluctance to offend Vladimir Putin is understandable. The Kremlin has pledged – but not yet handed over – a $2.5bn (£2.1bn) loan to bail out Cyprus's economy. Russia has also been a staunch supporter of Cyprus in the UN Security Council.

“Indeed, vast amounts of Russian money are stashed offshore in Cyprus. More than 25% of bank deposits and about one-third of foreign investments come from Russia. Typically, Russian investors create "brass-plate" companies to take advantage of Cyprus's low 10% corporate tax rate. Many of these funds are reinvested back in Russia – $1.4bn in 2008 – avoiding Russian tax. The Cypriot authorities angrily deny that the island is a haven for money laundering. They also point out that Russians invest more cash in Austria and the UK.

“But many analysts are skeptical: "We are talking about Russian money laundered through Cyprus. The Russian mafia uses Cyprus extensively," said Hubert Faustmann, associate professor of European studies at Nicosia University. "This is why Russia has no interest in Cyprus going down economically."

“Cyprus's foreign minister, meanwhile, denies that the country has become, in effect, an offshore colony of Russia. Erato Kozakou-Marcoullis said that Cyprus had had a close strategic partnership with Moscow dating back to Soviet times, based on a shared Orthodox faith and a cold war history of non-alignment under Archbishop Makarios, who led Cyprus in the 1970s.
Cyprus's president, Demetris Christofias, heads the communist Akel party. He was educated in Soviet Moscow and is a fluent Russian speaker. WikiLeaks cables written by US diplomats
capture him displaying a "passion for Nato-bashing"; he proudly described himself during a nostalgia-fuelled 2008 visit to Moscow as "Europe's red sheep".

“Of Russia's Cyprus bailout, Kozakou-Marcoullis said: "It was a good loan on good terms. We will pay back every rouble. We are grateful." She added: "Russia has always been supportive of our independence, sovereignty and territorial integrity."

“Russia's spy agencies are also believed to be active in Cyprus, which is of strategic importance because of its proximity to the Middle East, an area of traditional influence by Moscow. The MS Chariot is not an isolated example of weapons-smuggling. Russia is involved in running a huge weapons trade via Cyprus to the countries of the Middle East, particularly to Syria, Lebanon, Iran and Iran – and even to China and India, some Russian sources allege.

“Not surprisingly, some wonder whether Cyprus's reliance on Moscow has overstepped the boundaries of propriety. Writing in Cyprus's Sunday Mail, the anonymous columnist Patroclos complained that officials didn't bother to check the contents of the MS Chariot "lest our Russian masters took offence".

“The columnist said that the official excuse – that the containers were "too narrow" for inspection was frankly laughable. "Do we expect anyone to believe these pathetically lame excuses which are of the type used by school kids who do not do their homework?"

“He added: "I thought it was only other countries that put their interests above international legality, conventional obligations and principles."